Analysis: Space Force budget growth may be short-lived

Avascent: “With inflation eroding the value of any projected increases and a potential recession looming, real dollar space investment may have hit its zenith”

WASHINGTON — President Biden’s proposal defense budget for fiscal year 2023 is “record high” for national security space, according to a new report from the Avascent consulting firm. Funding for military space has grown every year since 2018, but that growth may not be sustainable, the report says.

The administration’s own projections show Space Force funding — $24.5 billion proposed for 2023 — will increase a modest 4.2% in 2025 before leveling off by 2027.

“With inflation eroding the value of any projected increases and a potential recession looming, real dollar space investment may have hit its zenith,” Avascent says.

A major concern for the Space Force will be paying for its ambitious multi-orbit missile warning, missile tracking and communications satellite architecture, all of which saw substantial increases in 2023. This issue has also been raised by the House Appropriations Committee in a report submitted with its 2023 defense budget markup.

Defense and aerospace industry analyst Andrew Penn, one of the authors of the Avascent report, said the DoD’s five-year funding projections are subject to change, but it’s unclear what that the future holds for space budgets.

“One thing is certain: With an ever-changing Congress and executive branch, actual DoD spending for the current year is certain to diverge from current projections,” he said. SpaceNews. “The Five-Year Defense Plan summarizes the best estimates of the current administration and the customer community based on the current threat environment, industrial base, and competing federal priorities. But given the long procurement lead times for large programs, the FYDP can be a good starting point.

Despite Congressional support and a strong case for continued space investment, he said, “Spending levels for the national security space budget will ultimately be shaped by exogenous factors as well as by the attitudes of the owners of Congress”. Penn noted that the 2023 defense plan was drawn up long before inflationary pressures began and long before Russia invaded Ukraine.

Compromises will likely be necessary

If revenue doesn’t grow past 2025 as currently projected, the DoD and Space Force could face tough trade-offs, Penn said. The biggest items in the space budget are missile warning and tracking satellites, “and there’s a lot of skepticism on the Hill about how much that’s going to cost,” he added, because Current figures do not reflect the effects of inflation.

The assumption at the time of writing this budget was an inflation rate of 2.2%, but inflation is now above 8% with no immediate signs of slowing down. “For these programs to run on schedule, they would definitely need more money than the current plan calls for,” Penn said.

Another program that could run into trouble is the Evolved Strategic Satcom, or ESS, the most expensive of the Space Force communications satellites. The ESS will provide highly secure lines of communication for the most sensitive national security operations, including nuclear command and control.

Penn said the DoD may push the ESS schedule to the right to save money in the short term, because the nuclear command and control mission can be met with existing satellites, “although it is done at the cost of less resilience and mission capability than the ESS would provide.”

However, because of the national security implications of space programs and the accelerating space race with China, future administrations and lawmakers will be reluctant to cut such projects, Penn said. “If you’re looking for bill payers for broader government funding issues, space isn’t the place to look.”

National security space accounts for just 1.3% of federal discretionary investments and 2.7% of DoD spending. “It’s an anomaly on the radar,” Penn said. “And it offers excellent “value for money” which should help sustain budget growth in the future. »

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